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Management of Ramkumar Mills Pvt. Ltd., Rep. by its Director Shivakumar A. Yadalam, Bangaluru v/s The Secretary, Department of Labour, Government of Karnataka, Bengaluru & Others

    W.A. No. 215 of 2020 (L-RES) & W.P. No. 40009 of 2018 (L-RES)

    Decided On, 12 November 2021

    At, High Court of Karnataka

    By, THE HONOURABLE MR. JUSTICE ALOK ARADHE & THE HONOURABLE MR. JUSTICE ANANT RAMANATH HEGDE

    For the Appellant: S.S. Naganand, Senior Counsel, K.R. Anand, Advocate. For the Respondents: R1, G.V. Shashikumar, AGA, R3, Subba Rao, Senior Counsel, M. Subramanya Bhat, Advocate.



Judgment Text

(Prayer: This Writ Appeal is filed under Section 4 of the Karnataka High Court Act praying to set aside the Order, dated 4.2.2020 passed by the learned Single Judge in Writ Petition No.40009 of 2019 (L-Res) of the Appellant herein and further be pleased to allow the Writ Petition and the prayer made therein)

Alok Aradhe, J.

1.This Intra-Court Appeal takes an exception to Order, dated 4.2.2020 passed by the learned Single Judge by which Writ Petition preferred by the Appellant has been dismissed. In order to appreciate the Appellant's grievance, relevant facts need mention, which are stated infra.

2.The Appellant is a Company incorporated under the companies Act, 1956 and is engaged in the manufacture of dyeing, printing and bleaching of cotton fabrics since, 1981. The Appellant has its factory at Rajajinagar, Bengaluru. The Appellant has in its roll 131 workers plus 7 Workers on Contract. The Water (Prevention and Control of Pollution) Act, 1974 and Air (Prevention and Control of Pollution) Act, 1981 were enacted to provide for the prevention, control and abatement of air and water pollution as well as for establishment of the Boards with an object of carrying out the purposes of the Act and the matters connected therewith.

3.The Appellant had obtained the consent under the 1974 and 1981 Act to carry out dyeing, printing and bleaching of cotton fabrics upto the capacity of 21 Lakh meter per month. The Appellant applied under the 1974 and 1981 Act for renewal of consent for a period from 1.7.2017 to 30.6.2018. The premises of the Appellant were inspected on 13.9.2017. Thereafter, Show Cause Notices were issued to the Appellant on 10.10.2017 under the Acts. The orders under Section 25(4)(b) of the 1974 Act and under Section 21(4) of the 1981 Act dated 16.3.2018 were passed. The Karnataka State Pollution Control Board (hereinafter referred to as 'the Board' for short) in its order took note of the fact that the factory of the Appellant is located in the heart of the city and is surrounded by commercial, residential area and Educational Institutions. The Karnataka State Pollution Control Board refused to grant consent for operation of the industry to the Appellant and directed that the industry shall not operate henceforth.

4.Thereafter, the Appellant issued a Notice, dated 21.3.2018 to the Workmen, by which Workmen were informed that in view of suspension of manufacturing activities in the light of refusal to grant consent to operate the industry, the Workmen need not report for duty from 26.3.2018 until further orders and Workmen were further informed that they will be paid their normal wages till an appropriate decision is taken by the Management of the Appellant. The Appellant thereafter filed a Petition on 7.5.2018 under Section 25-O of the Industrial Disputes Act, 1947 (hereinafter referred to as 'the Act' for short) read with Rule 77-C(1) of Industrial Disputes (Karnataka) Rules, 1957 (hereinafter referred to as 'the Rules' for short) in which a prayer was made to the Government to grant permission to close down the industrial undertaking. The notice of the Petition was issued to Respondent Nos.2 and 3. The respondent No. 2-Union did not appear. The Respondent No.3-Union appeared and filed its objections.

5.The appropriate Government by an Order, dated 29.6.2018 held that application for closure is premature and the Appellant needs to make sincere efforts to explore the alternatives in the interest of Workers and their families within the time frame given by Karnataka State Pollution Control Board. The Appellant thereafter, submitted an application on 2.8.2018 seeking review of the Order, dated 29.6.2018. The aforesaid application was rejected by an Order, dated 25.8.2018. Thereafter, the appropriate government by an Order, dated 14.2.2019 permitted the Union to prosecute the Appellant under Section 25(R) of the Act. The Appellant challenged the validity of the Orders, dated 29.6.2018, 25.8.2018 and 14.2.2019 in a Writ Petition. The learned Single Judge by an Order, dated 4.02.2020 dismissed the Writ Petition with the liberty to the Appellant to file a fresh Petition under Section 25-O of the Act to seek closure of the industry, if so advised. However, the Order, dated 14.2.2019 permitting the Union to prosecute the Appellant under Section 25-R of the Act was kept in abeyance for two months. In the aforesaid factual background, this Appeal has been filed.

6.Learned Senior Counsel for the Appellant submitted that the Appellant along with the Petition filed under Section 25-O of the Act had furnished the documents. However, neither the contents of the Petition nor the documents have been adverted to and a non speaking order has been passed, which suffers from the vice of non application of mind. It is also urged that in view of stringent regulations which categorizes the industry of the Appellant as highly polluting. The Board has refused consent for operations. It is also urged that in view of topography of the plant and acquisition of substantial part of land for road widening and underpass, it is not possible to continue the operation of the industry as the Appellant is unable to set up either sewage treatment plant or storage facility for LPG gas. It is also urged that it is not possible to attain zero liquid discharge as required by the Board and the industry which is in an extremely densely populated urban residential area cannot operate in the location.

7.It is also urged that the Notice, dated 21.3.2018 was superseded by communication dated 3.11.2018 and all 131 Workmen have been paid Wages from 21.3.2016 to 6.7.2018. It is urged that the finding recorded by the appropriate Government that the application is premature is perverse and the contention of the Union that the application, dated 2.8.2018 could not be accepted as no format for an application for review has been provided under the Act and the Rules. It is also urged that validity of an order has to be assessed on the grounds on which it is passed and the same cannot be supported with reference to the reasons which are supplied later. It is also urged that the Appellant is ready and willing to pay a sum of Rs. 1 Crore as ex-gratia over and above the statutory dues to the Workmen. In support of aforesaid submissions, reliance has been placed on decisions inExcel Wear and others v. Union of India & ors.,1978 (2)LLN482 (SC): 1978 LLJ 527 SC;D.C.M. LTD. v. LT. Governor, Delhi & ors.,1989 (2) LLJ Del. HC 250;Kranti Associates Pvt. Ltd. and another v. Masood Ahamad Khan and others,2011 (1) MWN (Civil) 677 (SC) : 2010 (9) SCC 496;Cable Corporation of India Ltd. v. Additional Commissioner of Labour & ors,2008 (3)LLN468 (SC): 2008 (2) LLJ SC 1057; and Decision of learned Single Judge inMysore Paper Mills v. State of Karnataka and two others,W.P. No.30139 dated 9.1.2020.

8.On the other hand, learned Senior Counsel for the Respondent No.3 submitted that from perusal of the minutes of the proceeding before the Board, it is axiomatic that the industry was not serious in implementing water pollution control and air pollution control measures. It is also argued that the Board in its Order, dated 16.2.2018 had permitted the industry to operate till 30.6.2019. However, before expiry of the aforesaid period, on 7.5.2018 an application under Section 25-O of the Act seeking closure was filed. It is also urged that the Appellant had issued a notice to the Workmen on 21.3.2018, which has not been withdrawn by it. It is also urged that the application submitted by the Appellant under Section 25-O of the Act has not been adjudicated upon and it has been held that the aforesaid application is immature. Therefore, no cause of action has accrued to the Appellant. Learned Senior Counsel for the Union has also the assertion on behalf of the Appellant that Wages of the Workmen from 21.3.2018 till 6.7.2018 has been paid. It is also urged that the Order passed by the learned Single Judge does not call for any interference. In support of aforesaid submissions, reliance has been placed on decision of Supreme Court inOrissa Textile & Steel Ltd. v. State of Orissa and others,2002 (2) SCC 578.

9.We have considered the submissions made by learned Counsel for the parties and have perused the record. Before proceeding further, it is apposite to take note of Section 25-O of the Act. The aforesaid provision was substituted by Act No.46 of 1982 with effect from 21.8.1984. The relevant extract of Section 25-O reads as under:

"Procedure for closing down an undertaking.- (1)An Employer, who intends to close down an undertaking of an industrial establishment to which this Chapter applies shall, in the prescribed manner, apply, for prior permission at least ninety days before the date on which the intended closure is to become effective, to the appropriate Government, stating clearly the reasons for the intended closure of the undertaking and a copy of such application shall be served simultaneously on the representatives of the workmen in the prescribed manner:

Provided that nothing in this sub-section shall apply to an undertaking set up for the construction of buildings, bridges, roads, canals, dams or for other construction work.

(2)Where an application for permission has been made under sub-section (1), the appropriate Government, after making such enquiry as it thinks fit and after giving a reasonable opportunity of being heard to the Employer, the Workmen and the persons interested in such closure may, having regard to the genuineness and adequacy of the reasons stated by the Employer, the interests of the general public and all other relevant factors, by order and for reasons to be recorded in writing, grant such permission and a copy of such order shall be communicated to the Employer and the Workmen.

(3)Where an application has been made under sub-section (1) and the appropriate Government does not communicate the order granting or refusing to grant permission to the Employer within a period of sixty days from the date on which such application is made, the permission applied for shall be deemed to have been granted on the expiration of the said period of sixty days.

(4)An order of the appropriate Government granting or refusing to grant permission shall, subject to the provisions of sub-section (5) be final and binding on all the parties and shall remain in force for one year from the date of such order.

(5)The appropriate government may, either on its own motion or on the application made by the Employer or any Workman, review its order granting or refusing to grant permission under sub-section (2) or refer the matter to a Tribunal for adjudication:

Provided that where a reference has been made to a Tribunal under this sub-Section, it shall pass an award within a period of thirty days from the date of such reference.“

10.Thus, under Section 25-O(2) of the Act, the appropriate Government has to conduct an enquiry and after giving a reasonable opportunity of being heard to the Employer the Workmen and the persons interested in such closure and having regard to genuineness and adequacy of the reasons stated by the Employer, the interest of the general public and all other relevant factors and by recording the reasons in writing grant or may refuse to grant permission. The procedural requirement of recording the reasons has been incorporated in Section 25-O(2) of the Act.

11.The validity of Section 25-O of the Act was considered by Constitution Bench of the Supreme Court inOrissa Textiles and Steels Ltd.(supra) and it was held that Section 25-O is not ultra vires the Constitution and is saved by Article 19(6) of the Constitution of India. The relevant extract of Para 18 of the decision reads as under:

”InExcel Wear and others v. Union of India & ors.,1978 (2)LLN482 (SC): 1978 LLJ 527 SC: 1978 (4) SCC 224: 1978 SCC (L & S) 509: 1979 (1) SCR 1009, it has been accepted that reasonable restrictions could be placed under Article 19(6) of the Constitution. Excel Wear case, 1978 (4) SCC 224: 1978 SCC (L & S) 509: 1979 (1) SCR 1009, recognizes that in the interest of general public it is possible to restrict, for a limited period of time, the right to close down the business. The amended Section 25-O lays down Guidelines which are to be followed by the appropriate Government in granting or refusing permission to close down. It has to have regard to the genuineness and adequacy of the reasons stated by the Employer. However, merely because the reasons are genuine and adequate cannot mean that permission to close must necessarily be granted. There could be cases where the interest of general public may require that no closure takes place. Undoubtedly where the reasons are genuine and adequate the interest of the general public must be of a compelling or overriding nature. Thus, by way of examples, if an industry is engaged in manufacturing of items required for defence of the country, then even though the reasons may be genuine and adequate it may become necessary, in the interest of the general public, not to allow closure for some time. Similarly, if the establishment is manufacturing vaccines or drugs for an epidemic which is prevalent at that particular point of time, interest of the general public may require not to allow closure for a particular period of time.“

12.It is well settled in law that reason is the heartbeat of every conclusion and absence of reasons renders the orders lifeless. The requirement of assigning reasons ensures transparency and fairness in decision making. The reasons act as a link between the mind of the decision maker and the issue, which arises for determination. The Supreme Court has emphasized the requirement of new recording of reasons in support of the conclusions inBhagat Raja v. Union of India and others,AIR 1967 SC 1606, and it has been held that reasons recorded in support of the conclusions must be explicit and intelligible. It has further been held that reasons have to be proper, relevant, germane and should deal with arguments advanced, points raised and issues involved. The requirement of assigning the reasons also helps the Appellate Court in ascertaining as to the grounds, which weighed with the authority in coming to a particular conclusion. [See:Vishnu Dev Sharma v. State of U.P. & ors,2008 (3) SCC 172]. InVictoria Memorial Hall v. Howrah Ganatantrik Nagrik,2010 (3) SCC 732, reasons were held to be the heartbeat of every conclusion, apart from being an essential feature of the Principles of Natural Justice, that ensure transparency and fairness, in the decision making process. [SEE:Maya Devi v. Raj Kumari Batra and others,2010 (9) SCC 486;Sant Lal Gupta and others v. Modern Cooperative Group Housing Society Limited and others,2010 (13) SCC 336;Union of India and another v. Talwinder Singh,2012 (5) SCC 480; andUnion of India v. Ravinder Kumar,2015 (12) SCC 291. It is pertinent to note that in the instant case Section 25-O contains the procedural safeguard of recording the reasons.

13.In the instant case, the Appellant in its application had furnished the elaborate reasons for the proposed closure which runs into 29 pages. The appropriate Government has passed an order, which reads as under:

”Order

No. LD 634 IDG 2018, Dated 29.6.2018

After carefully examining all the relevant provisions of the Industrial Disputes act, 1947 read with Karnataka Rules framed there under, application for closure submitted by the Applicant, objections filed by the Union and the arguments by both the sides I, Amlan Aditya Biswas, Secretary to Government, Department of Labour, Government of Karnataka, exercising the power

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s vested in me under Section 25(0)(2) of the Industrial Disputes At, 1947, hereby order that the application for closure is premature and the Applicant needs to make sincere efforts to explore alternatives in the interest of the workers and their families within the time frame given by the KSPCB." 14.Thus, it is axiomatic that no reasons worth the name have been assigned for arriving at the conclusion that the application for closure is premature. The order has been passed in violation of the mandate contained in Section 25-O(2) of the Act and the same has been passed in a cryptic and a cavalier manner and the same suffers from the vice of non application of mind. The impugned Order therefore cannot be sustained in the eye of law. The Order passed by the learned Single Judge is set aside. 15.For the aforementioned reasons, the Order, dated 29.6.2018 as well as *25.8.2018 are hereby quashed and the appropriate Government is directed to afford an opportunity of hearing to both the parties and to pass a fresh order by assigning reasons bearing in mind the mandate contained in Section 25-O(2) of the Act. The parties are directed to appear before the appropriate Government along with a copy of the Order passed today on 30.11.2021. The appropriate Government shall pass an order on the Petition under Section 25-O of the Act within a period of three months from the date of appearance of the parties before it. Since, the Orders, dated 29.6.2018 and *25.8.2018 have been quashed, the Order, dated 14.2.2019 permitting the Union to prosecute the management under Section 25-R of the Act shall remain in abeyance till the orders are passed on the application under Section 25-O of the Act. In the result, the Appeal is disposed of.
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